Archive for June 2012

1. Tim Duy has some perceptive comments on how Fed-think is ruining our economy:

Bullard divulges that the FOMC still doesn’t understand its job:

“Bullard said that ‘Treasury yields have gone to extraordinarily low levels. That took some of the pressure off the FOMC since a lot of our policy actions would be trying to get exactly that result.'”

The FOMC just cannot see that low interest rates are a sign of tight money, an expectation that the economy is facing headwinds and the Fed is not going to sufficiently offset the subsequent drag on growth. They need policy such that interest rates start to rise on the back of economic gains. That falling yields are a bad, not good sign, completely eludes them.

2. James Hamilton provides a public service. This post allows you to win 100% of cocktail party debates over gasoline prices. Just remember “84 cents plus 2.5% of Brent.” That’s not so hard.

3. Matt Yglesias shows that although GOP voters are opposed to big government, they are also opposed to any significant steps to rein in government spending (at least if you believe polls, which I don’t unless I agree with them, which in this case I do.) There are interesting hints that independent voters might actually be more libertarian than GOP voters (on spending, not taxes.) As the core of the GOP moves south, it becomes more like a European-style conservative party—pro-big government, pro-cartels and regs that favor affluent people, and culturally conservative. Unfortunately our political system has no place for pro-free market and socially liberal people. The kind that read The Economist magazine. So they end up as independents.

Short of such a union, the only alternative is for the euro zone to inflate its way out of trouble, Mr. Sumner argued. The European Central Bank would need to be allowed to print money and buy sovereign debt from across the periphery until those countries rediscover competitiveness. Otherwise, the euro’s days are numbered.

I believe that even a “union” would fail to solve their problems. I don’t view my monetary policy proposal as inflationary. I don’t think they’d need to buy up lots of sovereign debt. I’m no expert on the ECB, but whatever assets they normally buy, or loans they normally make, would be sufficient. There is no need for any change in technique. The euro may survive even if they don’t follow my advice, but some countries may exit.

5. Last, and definitely not least, Ryan Avent has a magnificent post demolishing the recent report by the BIS. Ironically, when the BIS was first created around 1930 they were seen as a progressive organization that would work for central bank coordination to arrest global depression. Now they’ve morphed into a club that represents all the worst aspects of 1930s conservatism:

At the heart of the BIS’ flawed thinking are a number of key misconceptions:

Low interest rates represent accommodative monetary policy. This is a venerable error, also popular during the 1930s. Central banks change the cost of money—the interest rate—in order to clear labour markets. Policy is accommodative not when interest rates are low in absolute terms, but when they are low relative to the market-clearing rate. Economist estimates (including some by Federal Reserve economists using Taylor rules) indicate that for much or all of the period from late 2008 to now the market-clearing interest rate in advanced economies has been negative, substantially so in some cases. Near-zero nominal interest rates (and even moderately negative real interest rates) may therefore represent too-tight monetary policy: money too costly to encourage the spending and investment necessary to achieve full employment.

. . .

Secondly, the BIS takes the distressingly Hayekian (or Mellonist) view that “malinvestment” during the boom must somehow be paid for in slower growth now:

“Because labour and capital do not easily shift across industries, the misallocation of resources during the boom tends to work against recovery in the aftermath of a crisis. Hence, countries where the sectoral imbalances were most apparent are facing higher and more protracted unemployment as their industrial structure only slowly adjusts.”

Exhibits A and B for this argument—Spain and Ireland—are fairly lousy examples given the absence in those countries of an independent monetary policy (the BIS might as well argue that countries with no central bank can’t rely on a competent central bank to stabilise the macroeconomy). America, the BIS’ Exhibit C, reveals the weakness of the argument. America’s housing crash began in earnest in 2006, at which point sales, construction, and real-estate employment all commenced plummeting. GDP growth continued, however, and unemployment remained at normal levels until mid-2008, two years later, at which point nominal output began to fall well short of trend and falling employment affected nearly every major industry. Labour and capital shift easily enough when demand follows expectations—when central banks do their job.

Central banks can’t do more without confronting unacceptable risks. The BIS cites imbalances as obstacles to effective monetary policy while acknowledging that by pushing unconventional monetary policy further central banks can impact aggregate demand. A host of accompanying risks to such policy suggests they should not, however. What sort of risks?

If the central bank does its job, in other words, politicians may not do the things central bankers think they ought to do. Implied in this assessment is that it is the central banker’s job to hold elected governments accountable for public finances and supply-side policies rather than the electorate’s. This represents both a dereliction of the central bank’s duty and an astounding policy overreach. In a similar vein:

“[L]arge-scale asset purchases and unconditional liquidity support together with very low interest rates can undermine the perceived need to deal with banks’ impaired assets.”

In other words, neglect of the central bank’s primary duty may be appropriate in order to focus the minds of bank executives and politicians on potential asset losses. Translated, this is effectively the liquidationist view of recovery; if interest rates were higher, advanced economies would be forced into wholesale default, the end result of which would be (assuming society survives the ensuing depression) clean balance sheets.

There’s much more—read it all.

I get depressed reading many of the comments in my blog. People ranting about the Rothchilds. Complaining that I’m getting my hands dirty trying to make central bank policy a bit less bad, trying to help the millions of unemployed. They stand on the sidelines without a spot on mud on their clothing, insisting we need to destroy the central banks. Bring on mass liquiditation. Destroy everything and a new and more pure and more beautiful economy will rise from the ashes. Some are the very same people who suggest 9/11 was a CIA plot. It smells of the 1930s. God I hate ideologues.

I plan to take a short break from blogging to finish up some projects.

HT: Tyler Cowen, Saturos

Update: 6. On second thought, maybe we do need a 20-year recession to really cleanse the economy of its excesses.

If the big cause of the debt problem is declining nominal GDP, then it follows that the solution must be rising nominal GDP. Indeed, if Japan had managed to grow at 3 per cent in nominal terms over the past 15 years, the economy would be two-thirds bigger than it is now, asset prices would be higher and government finances in better shape.

Just imagine it is this Thursday evening in the European Council’s gathering of Europe’s heads of state, and the Italian prime minister stands up and says this: “Mr President, dear colleagues. We are confronted with a simple choice: we can today either save the euro and build the foundation for a future political union, or we could flunk it and achieve neither. We all know what we need to do to save the euro. We require a banking union for Spain, a fiscal union for Italy and a political union for Germany.

“We can, of course, disagree on details. But we have to settle some of these differences this weekend, and take a decision on the steps that are needed right now. Our crisis resolution policies have failed time and again. We now need something that works fast. If we fail, I can assure you that I can no longer be part of this group, and my country can no longer be part of this project.”

I’m having a great deal of trouble following the logic of all this, but perhaps my commenters can set me straight. Obviously lots of smart people agree with Munchau.

It seems obvious that the euro was a colossal blunder, for reasons ably explained by Paul Krugman in this post. It also seems clear to me that the euro can’t be fixed with fiscal and banking unions. If Greece doesn’t devalue, it will remain deeply uncompetitive for many years. And yet most Very Serious People (and even Krugman is in that group) would be sad to see the euro collapse and are reluctant to pull the plug. I think they overrate the effects on the European project, (which I agree has been mostly a force for good.)

In my view the euro is fatally flawed, and Europe would be much better off with the monetary regime of the late 1990s. Yes, a collapse would be very messy, and perhaps it should be avoided, but let’s not ever forget that the system we are trying to save is a bad one, and if we “succeed” then the eurozone will be condemned to further crises in the future. Maybe not debt crises, but at the very least competitiveness/unemployment crises. So we shouldn’t enact other flawed policies to save this flawed one.

Now the talk is adding three more unions; banking, fiscal and political. These are very poor policy options, which wouldn’t even be undergoing consideration if not for the frantic desire of the VSPs to save the euro. Banking union will make the moral hazard problem even worse. As it is, the Spanish government didn’t do enough oversight of the regionally-owned savings banks. And now we are talking about shifting the burden of bank failures from the national governments to the eurozone taxpayers? How is that likely to improve regulation? And why stop there, why not an OECD banking union? (The new issue of The Economist says the burden of financing the deposit insurance fund will fall on banks, not taxpayers. Yeah, and motorists don’t pay petrol taxes, oil companies do. I expect that from the mainstream media—but The Economist? )

I can see how banking union might conceivably be defensible. Perhaps the eurozone regulators will be controlled by countries that want much tougher standards. Perhaps it will work. But fiscal union and political union seem to be an even greater leap into the unknown. I’d consider these as a pair, as I don’t see how you could have one without the other. Whoever is cutting the checks will demand a say in how the money is to be spent.

It seems inconceivable to me that Britain would agree to a political union, so I presume this discussion refers to the eurozone, not the EU. The eurozone excludes Norway, Iceland, Sweden, Denmark, Britain and Switzerland. That’s a fairly affluent group of countries. The eurozone is shaped roughly like a pyramid, with Finland on top, and a wide base stretching from Portugal to Cyprus on the bottom. Most of the weight if a pyramid lies in the bottom half, which in the case of the eurozone is mostly lower income countries like Italy, Spain, Greece, Portugal, Cyprus, and Malta.

The balance of power would probably lie with France. Germany must be terrified that the new French government has just lowered the retirement age to 60 for some workers, and is throwing its lot in with the “pro-growth” PIIGS. It seems to me that a fiscal union would basically be a regime for shifting wealth from the north to the south. Given that Germany is one of the few northern countries that’s actually in the eurozone, they must be feeling very isolated right now. Oh wait, I forget about Estonia . . .

I recall that Krugman mentioned that places like Greece and Portugal are about as far below the eurozone average as Mississippi is below the US average. That’s true, but misleading for all sorts of reasons.

1. There are studies showing places like Mississippi receive massive subsidies from other states. In my view those data are somewhat misleading. If taxpayers in New York pay into Social Security for many years, and then receive benefits when they retire in Florida, it seems a bit misleading to view that as some sort of gift from the state of New York to the state of Florida. Ditto for money spent on things like nuclear weapons silos in North Dakota. Nonetheless, I accept the basic point that poorer states like Mississippi are net receivers of federal money. But Mississippi does not elect Senators who call for higher taxes on the rich with the money going to support poor people in Mississippi. The GOP would insist that’s because Mississippians have much more solidarity with the US than Greek voters would have with the eurozone. Dems would insist it’s all about white Mississippians having solidarity with other white people. But even using that worse case assumption, America’s fiscal union is still based on a more stable foundation, after all, there are affluent white taxpayers spread all across America. There aren’t many affluent Greek taxpayers residing in Hamburg.

2. The pyramid structure I referred to earlier is likely to get much worse as the eurozone grows over time. And it seems to me that here you have a massive adverse selection problem. Because of Abraham Lincoln, affluent states like Massachusetts can’t suddenly decide they want no part of our fiscal union, and would rather just reap the benefits of our large single market. But Switzerland, Norway can and did make that choice. Britain almost certainly would, and both Sweden and Denmark might as well. In contrast, Bulgaria, Romania and Croatia would like nothing more than to join such a union. And all the likely future expansion of the EU is into areas further east, and much poorer than even Greece and Portugal. Places like Armenia, Georgia, Ukraine (a country nearly the size of France) Belarus, Serbia, Macedonia, Bosnia, Moldova (the saddest place on Earth—even the name is depressing.) And did I mention Turkey? Indeed why not Russia at some distant point in the future?

I’m sure the actual fiscal and political union ideas being kicked around are much more modest than the scary picture outlined here. But once you start down that road, there isn’t any natural stopping point short of the United States of Europe. People often compare Europe to the US. That’s wrong; the eurozone is sort of like the US, although a bit poorer. But Europe as a whole is far poorer than the US, far more corrupt, backward, inefficient, whatever other pejoratives you want to apply. Even America at its worst (say the treatment of ethnic minorities) isn’t as bad as the treatment of gypsies in Eastern Europe. I hope the Europeans look before they leap. (In case I sound like an ugly American, I’d add that Europe is also better than America in some respects; lower crime rates, more attractive cities, less carbon emissions, etc. But none of that changes my basic argument here.)

Now it’s time for me to take off my reactionary hat, and put on my progressive hat. The best way for the Germans to avoid this potential fiscal nightmare is to agree to modestly adjust the ECB mandate, perhaps to a 4.5% NGDP growth mandate for the eurozone, level targeting. This would give wavering countries like Italy a sense of hope that there would be growth going forward, and that they would not get crushed under an ever growing burden of public debt to GDP.

I understand that most Germans would prefer the current 2% inflation target. But they need to think long and hard about which would be worse, tweaking the ECB target, or an open-ended commitment to eventually transfer trillions in German tax money to the south and the east of Europe. (I’m a utilitarian who is not opposed to redistribution. But if they really feel that generous I’d suggest Bangladesh or the Congo, not Greece.)

PS. After I wrote this post it occurred to me that more sophisticated euro analysts will view my scenario as simplistic and unrealistic—no one is seriously contemplating that level of integration. My point was not to predict the future, but rather to provide a warning. Once you start down that road, there will be constant pressure to go further. Quite likely at some point the northern European taxpayers will rebel, and we won’t end up with a United States of Europe. The policy will collapse. But why start down a road that will end in failure? The eurozone really only has two options; a more expansionary monetary policy or a breakup. There’s no point in looking for alternative solutions.

BIS analyses often contain useful warnings, including their prescient warning in the years around 2003-2005 that monetary policy was too easy, which turned out to be largely correct, as the boom and the subsequent bust made so clear. So the Annual Report is always worth reading.

That’s not clear to me; indeed NGDP growth wasn’t unusually high during the 2000s. Taylor continues:

This is especially true of the Annual Report released today because it devotes a whole chapter to serious concerns about the harmful “side effects” of the current highly accommodative monetary policies “in the major advanced economies” where “policy rates remain very low and central bank balance sheets continue to expand.” Of course these are the policies now conducted at the Fed, the ECB, the Bank of Japan, and the Bank of England. The Report points out several side effects:

First, the policies “may delay the return to a self-sustaining recovery.” In other words, rather than stimulating recovery as intended, the policies may be delaying recovery.

Fourth, the policies “have blurred the line between monetary and fiscal policies” another threat to central bank independence.

If you simply replaced the word “accommodative” with “contractionary” I would be in complete agreement with Taylor. And that’s actually pretty mind-boggling, when you think about it. It’s not that strange that we might differ on whether current monetary policy is contractionary or accommodative (although non-economists must be appalled that economists can’t even agree on something as basic as that.) What’s really shocking is that we even agree on the four effects from that monetary policy, even though logically one would think that accommodative policies would produce the exact opposite effect from contractionary policies. To make this point clearer, consider the fifth effect quoted by Taylor, which I omitted:

Fifth, the policies “have been fueling credit and asset price booms in some emerging economies,” thereby raising risks that the unwinding of these booms “would have significant negative repercussions” similar to the preceding crisis, which in turn would feed back to the advanced economies.

Since I think policy has been contractionary, I obviously can’t agree with that fifth effect. But I do agree with the first four!!

How can this be? How can two economists disagree on something so fundamental? It would be like two physicists disagreeing on whether a rising bar of mercury in a thin glass tube indicates rising or falling temperatures. No, it’s even worse. It would be like one scientist saying it indicates rising temps, and arguing that’s why ice is melting, and the other arguing that it indicates falling temps and arguing that’s why ice is melting. I.e. that H2O has the property of melting when things get really cold.

So the next question is; who is the crackpot who thinks a rising bar is colder temperatures, and who also thinks water melts when it gets really cold.

Obviously I don’t think either of us is a crackpot. And I freely acknowledge that I’m in the minority here, so that if there is a crackpot it’s probably me. But nonetheless let me try to explain how (I believe) most of the profession ended up being wrong here.

1. Although I’m in the minority, Milton Friedman argued that ultra-low rates are a sign that money has been tight (in reference to Japan in 1997.)

2. Ben Bernanke said in 2003 that neither interest rates nor the monetary aggregates were good indicators of monetary policy, and that only aggregates such as NGDP and the CPI are reliable indicators of the stance of monetary policy. If you average those out, then you notice that the growth rate of nominal aggregates since mid-2008 has been the slowest since Herbert Hoover was president.

Here’s where I think Taylor went wrong. He has money being very accommodative in 2003, 2004, 2005, 2008, 2009, 2010, 2011, 2012. OK, then tell me how all this accommodative policy brought us the slowest NGDP growth since the early 1930s? Why has headline CPI inflation averaged 1.1% since July 2008?

To go back to my temperature analogy, I’m claiming that NGDP and the CPI are the melting ice. We can disagree about whether a rising bar of mercury means that temps are rising or falling, but surely we can all agree that melting icecaps show it’s getting warmer.

And we can disagree about whether ultra-low interest rates and a bloated monetary base indicate easy or tight money, but surely we can all agree that ultra-slow NGDP and CPI growth are signs of tight money?

So how did Bernanke (in 2003), Friedman, and I end up in the minority? (So much so that even Bernanke’s jumped ship, calling current Fed policy accommodative even though his 2003 criteria suggests it’s ultra-tight.)

Monetary economics is a very strange field. As long as things are fairly normal (as during the Great Moderation) economists of wildly differing stripes see things in roughly the same way. Day-to-day adjustments in monetary policy are done via the liquidity effect, which means an unexpected rise in the Fed’s target rate really is contractionary, relative to the alternative. In addition, velocity is reasonably stable, so countries with higher trend inflation tend to have higher trend rates of growth in the money supply. Both Keynesianism and old-style monetarism have some validity—both the interest rate and the money supply seem at least slightly informative.

Now go to much higher inflation rates, such as the 1970s, or even better the Latin American hyperinflations. Now the Keynesian focus on the liquidity effect looks hopelessly out of touch, as interest rates are no longer very informative. Even worse for the Keynesians, monetarist ideas hold up pretty well. Yes, velocity speeds up, but not so much as to overturn the money/price level correlation—high inflation is associated with faster growth in M, and hence the money supply looks like a better policy indicator when inflation is high. Throughout history the quantity theory always becomes popular when inflation is high. Not just during the 1970s, both Wicksell and Keynes flirted with the QTM during the early 1920s European hyperinflations, despite their previous and subsequent bias towards interest rates as an indicator.)

Now go to much lower inflation rates, and especially a situation where nominal interest rates fall close to zero. Now both the Keynesian and monetarist indicators break down. If tight money created the fall in NGDP which drove rates to zero, then Keynesians will misdiagnose tight money as easy money. Even worse, monetarists will make the same mistake. The reason is complicated, but it has to do with the fact that velocity falls very sharply near zero. So central banks are forced to massively increase the ratio of base money to NGDP, to avoid severe deflation. But since prices and NGDP are fairly stable, the huge rise in the base/NGDP ratio means the nominal monetary base also rises sharply. That means the nominal base is sort of U-shaped, high in both liquidity traps and hyperinflation, and more modest during Great Moderations. So both monetarists and Keynesians tend to misdiagnose monetary policy during periods of ultra-low rates.

During the 1970s, the monetarists were able to show how Keynesians got it wrong, by pointing to the fast growing money supply. Then the vast majority of economists in the middle, who are open to pragmatic arguments, could say to themselves “OK, the monetarists are right, obviously if people need wheelbarrows of money to buy a loaf of bread, then money is not “tight” no matter how high the interest rate is.” But when we get to ultra-low rates and both the interest rate and the money supply signals are giving off false readings, then there is no one to correct the Keynesians. The (old style) monetarists are just as wrong. And we market monetarists are not influential enough (yet) to overcome the near universal view that money has been accommodative in recent years.

I’ve never studied topology, but I wonder if there isn’t an analogy here for the saddle point surface. The Great Moderation is like the sweet spot where things are locally flat, and Cartesian in all four directions. But when you move away from that point then both money supply and interest rate indicators become hopelessly unreliable. And monetary policy breaks down. The high inflation breakdown is less complete, because the money supply indicator still works somewhat. But the low inflation/interest rate breakdown causes mass confusion among policymakers, and may require some solution that involves thinking outside the box. In the 1930s that involved leaving the gold standard and devaluing the dollar—with the price of gold being the alternative indicator/instrument, when interest rate adjustments and/or QE weren’t working. Who will produce the out-of-the-box thinking required for our modern crisis?

This week Lars Christensen is hosting 4 posts on Keynes by Clark Johnson. Clark wrote an excellent book on the role of gold in the Great Depression, which has influenced recent work by Doug Irwin—particularly the hypothesis that French gold hoarding played a big role in the severe 1929-33 deflation. Clark is also a very shrewd reader of Keynes. Here is the concluding paragraph (but read the whole thing):

So here we are. We saw an historically sharp recovery for four months during 1933, driven almost entirely by a decision to break the straightjacket imposed on monetary policy by the international gold standard. Keynes had previously been an able critic of the gold standard, for example in the Tract on Monetary Reform (1923) and then in several chapters in the Treatise. The 1933 recovery was then stalled by micro-policies [the NIRA] of which he was explicitly critical. Yet Keynes seemed to dismiss this entire episode in his call a few months later for fiscal stimulus!

I should add that I’ve known Clark for many years. He gradually convinced me that I know nothing about foreign policy, which is why I never blog on that topic. (He was too polite to say this in so many words, it’s just that I noticed that subsequent events always showed that he was right and I was wrong.) I would describe his overall views as being politically moderate, and although his post is somewhat critical, Clark actually has enormous respect for Keynes, especially his Treatise on Money.

I occasionally post on how intellectuals tend to misuse public opinion surveys, often to argue that the public agrees with their policy preferences. I do think there are a few questions the public is capable of responding to in a semi-coherent fashion, such as “should the death penalty be abolished.” But when you get into the area of complex economic policy, then public opinion is just gibberish—it completely depends on how you frame the question. This was triggered by a recent Ezra Klein post:

Policy hasn’t tracked public preferences very closely. In polls, Americans have clearly supported higher taxes on the rich and a much more punitive approach to banker compensation.

That’s one way of asking the question—should the filthy rich and evil bankers pay more? But what if you ask the public what they consider to be the appropriate top income tax rate?

Three-quarters of likely voters believe the nation’s top earners should pay lower, not higher, tax rates, according to a new poll for The Hill.

The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below.

The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.

No one!!! Obama’s new tax bill calls for a top federal income tax rate of 43.4% in 2013, meaning the rich will face 50% tax rates in NY and California. Krugman and Saez favor still higher rates. I guess they weren’t asked.

Just to be clear, I’m not claiming the public agrees with me. I think both my survey an Ezra’s survey are nonsense. And one reason is that the public doesn’t understand taxes. Actually, forget about the public, I’d estimate that half the economists I talk to don’t understand that taxes on capital are double taxing the same wage income. That Buffett’s comment about paying 15% taxes is nonsense. If every voter were as well informed as Matt Yglesias (who favors a progressive consumption tax, which would amount to about a 1% income tax on Buffett), then we could survey public opinion on tax and spending questions.

But right now? Suppose you ask the public if spending $689 billion on the military is too much or too little. Then ask them whether spending 4.1% of national income on the military is too much or too little. Then ask them whether they believe we are currently spending too much or too little on the military. Those who believe in “public opinion” presumably believe there would be some sort of coherence to the answers to these three questions. (BTW, I pulled these numbers out of the air—even I have no idea how much we spend.)

And the public’s numbers don’t even add up—they want pie in the sky and lower taxes and more government goodies. If you simply sat them down and showed them the books they’d radically alter their policy views.

Pundits everywhere; can we please stop talking about public opinion on complex policy questions?

BTW, I don’t mean to pick on Ezra, who’s one of the best. Everyone does this, I just happened to run across his link in an Arnold Kling post which contains this comment:

On a substantive point, I agree [with Tyler Cowen] that public opposition to inflationary monetary policy is a factor. But is that anything new? It seems to me that since the 1960s elite economists have been periodically saying that it would be better to live with higher inflation and the public has been saying, “No!” The public opposition predates recent developments, either in terms of the recession or in terms of declining trust.]

The public has no idea what Bernanke means when he calls for higher inflation. For Bernanke, that’s a code word for “higher real incomes for Americans.” But the public sees inflation 100% in supply-side terms, as higher prices HOLDING MY INCOME FIXED. In that environment it makes zero sense to talk about the public’s view of inflation. Yes, they don’t like falling real incomes, but no one is proposing that. We’ve averaged 1.1% inflation over the past 46 months. Anybody think the public is enjoying those low inflation rates more than the 2-3% inflation of the Clinton years?

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Welcome to a new blog on the endlessly perplexing problem of monetary policy. You’ll quickly notice that I am not a natural blogger, yet I feel compelled by recent events to give it a shot. Read more...

Bio

My name is Scott Sumner and I have taught economics at Bentley University for the past 27 years. I earned a BA in economics at Wisconsin and a PhD at Chicago. My research has been in the field of monetary economics, particularly the role of the gold standard in the Great Depression. I had just begun research on the relationship between cultural values and neoliberal reforms, when I got pulled back into monetary economics by the current crisis.